Riegel: How long will Louisiana ignore fiscal reform?
It’s hard to decide which of the travesties of the recent Legislative session to be more upset about: The failure of the gasoline tax increase or the failure to make any progress—again—on fiscal reform. The people of Louisiana—and especially the business community—should be outraged.
Shockingly, it’s hard to find anybody outside of a handful of political circles who seems to care. You can get Baton Rouge good and ginned up about the College World Series or the future location of the BREC Baton Rouge Zoo.
But no one—least of all business owners, who regularly complain about the state’s economic development shortcomings—seems terribly bothered that the Legislature is more concerned about pandering to the far right than addressing fundamental problems with the state’s infrastructure and tax code. A gas tax bill by Republican state Rep. Steve Carter, of Baton Rouge, meant to address the state’s woeful infrastructure was shot down by the House. And Gov. John Bel Edwards, despite saying he would, ultimately didn’t bother fighting for anything resembling meaningful fiscal reform after looking across the right-leaning landscape.
Part of the problem is anything having to do with taxes is pretty much doomed to failure these days. It doesn’t matter if it’s a good tax, a bad tax, a tax to fund desperately needed new bridges and highways, or a tax reform proposal that will simplify an anachronistic, inefficient tax code.
If the word “tax” is attached, a majority of the people are going to oppose it, especially at a time when the economy is weak.
“You can’t do tax policy in a recession,” House Speaker Taylor Barras said in a recent radio interview.
I’m not sure why not. It seems like a recession would be one of the best times to implement a sensible tax policy that can stimulate economic growth by making the state’s tax climate more attractive to potential employers.
But that’s a complicated case to make, and the sad truth is most people aren’t well informed enough to make the connection. They don’t understand the complexities of issues like fiscal reform, nor the inclination or attention span to read a 30-column-inch story to learn the details. Consequently they have no idea why these things matter.
This isn’t mere supposition. I see metrics from our own Daily Report almost every day. I know how disconcertingly few readers click on a story about tax policy, new legislation or even a controversial local ordinance.
If, however, Bucc-ee’s is promising to build a Texas-sized rest stop along I-12, or if Les Miles’ job is on the line then the click rate goes through the roof.
Fiscal reform? Forget it. A new chain restaurant bringing more fast casual processed food to the market? Now that’s something people care about.
“But no one—least of all business owners, who regularly complain about the state’s economic development shortcomings—seems terribly bothered that the Legislature is more concerned about pandering to the far right than addressing fundamental problems with the state’s infrastructure and tax code.”
Michael Olivier, CEO of the state’s business roundtable, C100, shares my frustration. I called him to talk about the implications of any year without fiscal reform. He was bummed.
“Nobody seems to care about it,” he says.
Here’s why they should.
As has been well documented, Louisiana has what has been called the worst tax system in the country, unparalleled in its complexity. It relies heavily on temporary sales taxes, is riddled with exemptions and deductions, and allows all 64 parishes to collect and administer sales taxes, among other problems. It is unstable and unpredictable, two things business hates.
“Fiscal reform is important because it offers certainty to business and industry,” Olivier says. “Businesses are willing to pay taxes. They just want to know what the taxes will be and what are the regulations under which they have to operate because if they can plan out multiple years they will be able to budget.”
Olivier hears the stability and predictability mantra all the time. He’s an experienced economic development professional and says selling Louisiana isn’t easy.
“I remember going into corporate boardrooms and they’d say, ‘You have an eight percent corporate income tax rate, which is too high,’” he says. “I’d have to tell them, ‘No, it’s really only six percent when you factor in the exemptions and exclusions.’ But what if I had not gotten in the boardroom to make that case in the first place?”
Therein lies the problem. How many board rooms are the Oliviers and Adam Knapps and Don Piersons and other economic development professionals never seeing the walls of because of our state’s reputation as a place with great food, friendly people, crumbling infrastructure and the most screwed up tax code in the nation?
“Look, I tell everybody, when companies are looking to stay in our state and expand it is a site elimination process,” Olivier continues. “It is not a site selection process. In many instances you don’t even know you’re being looked at. You don’t even know you’ve been disqualified. I know people say branding is not a big deal. But it is because there is a lot of choice out there. If your brand is somehow tainted somehow you’re disqualified … and don’t think our competition doesn’t use this against us.”
It was a sobering conversation with Olivier, but a stark reminder of why it’s so important that we get informed enough to understand the significance of these issues and the importance of them—so we can get outraged.